Financial Report 2018

FINANCIAL REPORT 2018

BaptistCare NSW & ACT ABN 90 000 049 525 Annual Financial Report 30 June 2018 2

BAPTISTCARE NSW & ACT FINANCIAL REPORT

Contents Directors’ report

4

Auditor’s independence declaration

12

Statement of profit or loss and other comprehensive income

13

Statement of financial position

14

Statement of changes in funds

15

Statement of cash flows

16

Index to notes to the financial statements

17

Directors’ declaration

37

Independent auditor’s report

38

3

BAPTISTCARE NSW & ACT FINANCIAL REPORT

Directors’ report The Directors present their report together with the financial statements of BaptistCare NSW & ACT (the Company) for the financial year ended 30 June 2018 and the auditor’s report thereon.

BaptistCare NSW & ACT is a public company incorporated under the Corporations Act 2001, is limited by guarantee, is registered as a charity with the Australian Charities and Not-for-profits Commission, is endorsed as an Income Tax Exempt Charity by the Australian Taxation Office and recognised as a Public Benevolent Institution.

1. Objectives and Strategies The purpose of the Company is ‘Transforming Lives By Expressing The Love Of Christ’. he Company’s vision is to be ‘The Trusted Name In Life Transforming Care’, an aspirational goal T to facilitate life transforming care for and with our clients. he BaptistCare Strategic Plan sets the direction for the Company for the period 2016 to T 2020. This plan is reviewed annually as part of the business planning process and gives focus to how the Company will achieve its purpose by successfully serving the following groups: communities living with disadvantage and marginalisation, people experiencing situational distress, older people and carers.

The Company’s strategic approach to delivering its promise ‘Care you can trust’ and its focus on adapting to meet the changing needs of customers is an integrated approach to service delivery that enables the Company to organise its range of services around the needs of individual customers. This approach is facilitated by outstanding customer service, care planning, and the development of employees and volunteers.

The Company’s strategic objectives are: 1. To become a major provider of social and affordable Housing over the next five years by developing a portfolio of 1,000 dwellings to house families transitioning to living independently after being impacted by domestic violence, and older people at risk of homelessness; 2. To develop the ability to deliver integrated ‘wrap around’ housing support services including Chaplaincy, case management, social and financial inclusion, and counselling, in all locations where social housing is provided; 3. To empower our customers to achieve change, through an integrated, Community Service delivery approach, linked to multiple and complex levels of need arising from disadvantage and marginalisation; 4. To grow the Home Services customer base through providing high quality, comprehensive, price competitive services in both existing and new geographic areas, as part of BaptistCare’s integrated person centred care strategy; 5. To grow the Retirement Living portfolio through both development and acquisition, while aiming to offer a continuum-of-care service to customers; 6. To continue the focus on meeting missional needs for Residential Aged Care services, and investing in service improvement, support systems, property development, improvement and acquisition;

4

FOR THE YEAR ENDED 30 JUNE 2018

7. To ensure sufficient attraction and retention of suitably qualified and skilled staff and volunteers to meet business requirements, and create safe working environments for all staff and volunteers; and 8. To leverage information technology as a key enabler of business transformation.

Further information is available in the strategic plan and annual report, which are available for public distribution and can be accessed on the website, www.baptistcare.org.au/aboutbaptistcare/publications.aspx.

2. Principal activities The Company has four primary divisions which work together to achieve the objectives of the Company. These divisions are as follows: • Residential Aged Care; • Home Services for older people, carers and people living with a disability; • Housing and Retirement Living (which includes social and affordable housing); and • Community Services (which includes community centres, counselling services (relationship counselling, family counselling, domestic violence intervention services) and chaplaincy services.

The principal activities of these four divisions are as follows: Core Service Area:

BaptistCare Division:

Chaplaincy

All Divisions

Counselling

Community Services

Social & Financial Inclusion

Community Services

Community Housing

Housing & Retirement Living

Housing Support

Community Services

Home Care

Home Services

Retirement Village

Housing & Retirement Living

Residential Aged Care

Residential Services

3. Financial Position, Operational Highlights and Significant Changes in State of Affairs The operating surplus of the Company for the year ended 30 June 2018 was $14,193,000 (2017: $393,000).

Operational highlights for the year are as follows: • August 2017: The Company celebrated outstanding staff achievement at its annual You Can Awards Celebration Dinner. 23 outstanding awardees were honoured.

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

DIRECTORS’ REPORT (CONTINUED) • October 2017: In celebration of National Carers Week, the Company honoured local carers in the Northern Rivers region by hosting a free BBQ. In addition, Alan Gravolin, one of the Company’s Stronger Carers Peer Support volunteer coaches, was announced as NSW Carer of the Year.

• December 2017: The Company launched My Safety, a portal allowing all staff to log safety events such as hazards and incidents. This portal progresses the Company’s commitment to providing a safe workplace for staff and volunteers and reducing injury rates.

• January 2018: The new Hopestreet Women’s Centre was officially opened in Darlinghurst with the help of the Minister for Family and Community Services, Minister for Social Housing, Prevention of Domestic Violence and Sexual Assault, the Hon. Pru Goward MP. This Centre is designed to be a safe space where marginalised women in Sydney’s inner city can access free and confidential professional support.

• January 2018: The Company appointed Trevor Wight in the part-time role of Church Relationships Manager. This appointment increases the Company’s aim of working more closely with the Association of Baptist Churches of NSW and ACT. • February 2018: The Company’s Residential Services division introduced the My Day My Way (MDMW) program. This program is a whole-of-organisation approach to deliver better, relational, and person-centred care, ensuring our residents feel understood and valued. The model will be embedded in every aged care centre in the coming two years.

• February 2018: The Company celebrated having provided $11.5 million in no and low interest loans to people in need. The milestone took ten years to reach, and saw more than 7,000 people receive over 8,400 no-interest or low-interest loans from us, under the auspicing body of Good Shepherd Microfinance and in partnership with NAB and the NSW Office of Fair Trading.

• February 2018: The Hon. Pru Goward MP turned the first sod at our Social and Affordable Housing Fund (SAHF) development in Goulburn. The 20-unit complex is a part of the 2,200 residences being delivered through the NSW Government’s $1.1bn SAHF project.

• March 2018: Following the decommissioning of our Carlingford site, our day and overnight respite centre for older Australians living with dementia and their carers, which has been operating for more than 12 years, was relocated to Kellyville with the updated name of Willmette.

• March 2018: Our residents and staff at BaptistCare Dorothy Henderson Lodge were host to a crowd of well-wishers, as they celebrated the Lodge’s 25th Anniversary in Sydney’s Macquarie Park .

• March 2018: The Company joined the Everybody’s Home campaign, challenging all political parties to rethink housing policy and embrace new models of development, ownership and support to address critical shortage in supply of affordable or social rental properties which is contributing to record levels of homelessness.

• April 2018: Better Homes and Gardens’ gardening guru, Jason Hodges joined residents of The Gracewood Retirement Village in Kellyville to celebrate its fifth birthday.

• April 2018: The Company announced development of the third and final stage of independent living apartments at The Gracewood, which will include 88 new apartments and some exciting new outdoor amenities. Completion of the village will fully realise the Kellyville site, with retirement living, home care, a social club and residential aged care all in one location.

6

FOR THE YEAR ENDED 30 JUNE 2018

• May 2018: The Company’s third annual major fundraising activity, the Halo Ball, was held in Sydney and focused on the often voiceless victims of domestic and family violence: the children. $140,000 was raised.

• May 2018: The Company’s annual Palliative Care in Aged Care Conference was held and featured some of Australia’s most respected speakers, thinkers and practitioners in the field.

The conference included the launch of the Company’s new book, titled ‘Dying with Loving Words’, aimed at helping and equipping families and carers to connect and communicate with their loved ones.

• June 2018: The Company renewed its Enterprise Agreement (EA) for aged care staff. The EA provided increases to wages while also addressing a number of factors to ensure the Company’s ongoing competitiveness as an employer in aged care. The increase in wages continues to see the Company’s rates of pay among the highest in the aged care industry in NSW and the ACT. • June 2018: An unannounced accreditation visit under the new regulatory process occurred at our Griffith ACT residential facility. The subsequent outcome resulted in a sanction being imposed on the facility on 26th July 2018. Management took immediate steps to address the issues and appointed an Administrator and Nurse Advisor. In his first report, the Administrator confirmed that his “assessment of the issues in relation to serious risk is that any previous risk has been mitigated and that there is no immediate or future risk to current or future residents”.

• Our Social and Affordable Housing Fund (SAHF) developments continue to progress, with six of eight Development Applications approved in this year. Early work or construction has commenced on all six sites, with our first sites at Lismore and Goulburn due to be completed and ready for tenants by early 2019.

• The Company’s Pastoral Care Volunteer program continues to grow, with volunteers extending the work of our Chaplaincy teams, and providing support to our customers who are living in our aged care centres and in their own homes. Training has been delivered at the Central Coast, Gymea and Pennant Hills. 80 participants have graduated and 35 have become active Pastoral Care Volunteers with us.

More information is contained at www.baptistcareannualreport2018.org.au.

Significant changes in the state of affairs of the Company during this financial year are as follows: • November 2017: After 16 months of redevelopment, and 60 years after the centre was first opened, the Company officially opened its new look $11 million Niola Centre with a street festival and unveiling by Parkes Shire Mayor, Cr Ken Keith.

• December 2017: The Development Application was approved for the Company’s 12-unit expansion of BaptistCare Maranoa Village, in Alstonville. Construction is in progress and preparations are now underway for the marketing and sales of the new units. The new units are due for completion in late 2018.

• February 2018: The HopeStreet identity, established and grown at Woolloomooloo, was expanded across a number of the Company’s Community Centres. Each of our Community Centres provides services that meet the local needs of disadvantaged communities and people living on the margins, and the expansion of the HopeStreet brand affirms the uniqueness of each of our Community Centres and the communities they operate in.

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

DIRECTORS’ REPORT (CONTINUED)

4. Measurement of Performance The Company measures its performance through the establishment and monitoring of indicators and benchmarks, which are regularly reviewed by the Board and Senior Management. These include: • Customer satisfaction surveys for each area of operations; • Staff turnover and responses to the Staff Satisfaction Survey; • Work, Health and Safety measurements; • The cost-effectiveness of fundraising; • Progress on major capital projects; • Returns on investments; and • Various financial indicators, including performance against the Board-approved budget for the year.

5. Board of Directors The Members of BaptistCare NSW & ACT elect the Board.

The Board currently comprises 11 Directors (the maximum number is 12) who serve in a voluntary capacity and subject to the Company’s Constitution, the Corporations Act 2001 and the Australian Charities and Not-for-profits Commission Act 2012.

Details of the Directors of the Company at any time during or since the end of the financial year are: Judith Carpenter BA TCert MIMCA MAICD Human Resources Consultant

Appointed July 2002 Chair from 21 November 2016 Member of Remuneration & Performance Committee from May 2003 and Committee Chair from July 2010 Member of Ashfield Baptist Church

Corinne Glasby BEc FIAA Actuary

Appointed June 2007 Vice Chair from 21 November 2016 Member of Audit & Risk Committee from November 2007 Trustee of BCS Foundation from December 2010 Director of B.C.S. Foundation Pty Limited from December 2010 Member of Epping Baptist Church

Stuart Abbott B Bus Company Director and Chief Executive Officer

Appointed February 2017 Member of the Property Strategy & Building Governance Committee from May 2017 Member of Thornleigh Community Baptist Church

Owen Chew Lee BCA BSc FCA GAICD Banker and Company Director

Appointed June 2017 Member of the Audit & Risk Committee from June 2017 Member of the Remuneration & Performance Committee from June 2017 Member of Gordon Baptist Church 8

FOR THE YEAR ENDED 30 JUNE 2018

John Church FFin FCIS FAICD FTIA Solicitor, Public Notary & Company Director

Appointed September 1984 Member of Audit & Risk Committee from May 1992 Member of Governance & Nominations Committee from November 2009 Trustee of BCS Foundation from November 1999 Director of B.C.S. Foundation Pty Limited from November 1999 Member of Gordon Baptist Church

Craig Collins BBus (Land Economics) Chief Executive Officer, Hospitality Sector Company

Appointed November 2012 Member of Property Strategy & Building Governance Committee from May 2017 Member of Epping Baptist Church

Ruth McLean Appointed December 2012 BSocialStudies Member of Governance & Nominations Committee from Retired Aged Care Policy Adviser November 2013 Member of Care & Services Committee from May 2017 Member of Woonona Baptist Church Peter Murphy BBus MCom MA (Christian Studies) FCPA GAICD Management Consultant

Appointed April 2016 Member of Audit & Risk Committee from April 2016 and Committee Chair from August 2016 Member of Blakehurst Baptist Church

Cameron Webb BBus (Retail Management), MBA AAICD IT Executive, Retail

Appointed November 2016 Chair of Property Strategy & Building Governance Committee from May 2017 Member of Dural Baptist Church

Ian Wilson OAM BHealthScience(Mgt) Dip Health Admin Retired Chief Executive Officer, Aged Care/ Community Services

Appointed March 2010 Chair of Governance & Nominations Committee from November 2010 Member of Kiama Baptist Church

Robyn Worsley Retired Registered Nurse

Appointed March 2016 Member of Remuneration & Performance Committee from April 2016 Chair of Care & Services Committee from May 2017 Member of Carlingford Baptist Church

9

BAPTISTCARE NSW & ACT FINANCIAL REPORT

DIRECTORS’ REPORT (CONTINUED)

6. Directors’ meetings The number of meetings of the Board of Directors (including meetings of Committees of Directors) and the number of meetings attended by each of the Directors during the financial year is as follows: Remuneration Governance & & Performance Nomination Committee Committee

Care & Services Committee

Property Strategy & Building Governance Committee

Board

Audit & Risk Committee

Judith Carpenter

5

5

2

5

3

7

Corinne Glasby

6

6

-

-

-

-

Stuart Abbott

4

-

-

-

-

7

Owen Chew Lee

5

6

2

-

-

-

John Church

5

6

-

7

-

-

Craig Collins

5

-

-

-

-

3

Ruth McLean

5

-

-

6

2

-

Peter Murphy

5

6

-

-

-

-

Cameron Webb

5

-

-

-

-

7

Ian Wilson OAM

5

-

-

5

-

-

Robyn Worsley

6

-

2

-

3

-

Total number of meetings

7

7

2

7

3

7

Director

7. Company Members Membership of the Company is available to all Members of Churches affiliated with The Association of Baptist Churches of NSW & ACT in the following ways: • Each Church may nominate one person as their representative for Membership; • Individual Church Members may apply for Membership; • An individual may apply for Life Membership if they have made a single donation of $500 or more to the Company, or such greater amount as the Company in general meeting shall prescribe; and • A member of the Assembly Council of The Association of Baptist Churches of NSW & ACT may apply for Membership (which would apply during the term of their respective office).

In addition, the Directors may appoint Honorary Life Members in recognition of their outstanding service to the Company. At any time there can only be 30 Honorary Life Members (unless otherwise approved by the Company in general meeting).

At the date of this report there are 153 Members (2017: 160 Members) including 22 Honorary Life Members (2017: 22 Honorary Life Members). Each Member has a liability in the case of a winding-up. The extent of the liability of any Member under the guarantee is as follows: • Members prior to 20 March 1992: $0.10 • Members subsequent to 20 March 1992: $100 per Member 10

FOR THE YEAR ENDED 30 JUNE 2018

The total amount that Members of the Company are liable to contribute as at 30 June 2018 is $14,601 (2017: $15,101).

8. Events subsequent to reporting date There have been no events subsequent to the balance date which would have a material effect on the Company’s financial statements at 30 June 2018.

9. Government funding The Company would like to acknowledge the following Government Departments which fund programmes that the Company operates or conducts: • Australian Government: Department of Social Services and Department of Health.

• New South Wales Government: Department of Family and Community Services, NSW Health (through various Local Health Districts), Transport for NSW, Department of Attorney General and Justice, Corrective Services NSW, NSW Fair Trading, NSW Office of Environment & Heritage and Housing NSW. • Australian Capital Territory Government: ACT Government Health and ACT Government Community Services.

10. Lead auditor’s independence declaration The lead auditor’s independence declaration is set out on page 12 and forms part of the Directors’ report for the financial year ended 30 June 2018.

11. Rounding off The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the financial report and Directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

This Directors’ report is made out in accordance with a resolution of the Directors:

Judith Carpenter Director - Chairperson Dated at Sydney, this 24th day of September 2018

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

Auditor’s Independence Declaration ABCD Auditor’s Independence Declaration under subdivision 60-C section 60-40 of Australian Charities and Not-for-profits Commission Act 2012 To: the Directors of BaptistCare NSW & ACT I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2018 there have been: Auditor’s (i) no contraventions of the auditor independence out in the Australian Independence Declaration under subdivision 60-Crequirements section 60-40as ofset Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and Charities and Not-for-profits Commission Act 2012

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

To: the directors of BaptistCare NSW & ACT I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2014 there have been: (i)

KPMG (ii)

no contraventions of the auditor independence requirements as set out in the Australian Charities and Not-for-profits Commission Act 2012 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit.

Stephen Isaac Partner Sydney 24 September 2018 KPMG

Chris Hollis Partner Sydney 29 September 2014

12

FOR THE YEAR ENDED 30 JUNE 2018

Statement of profit or loss and other comprehensive income In thousands of AUD Note

2018 2017

Revenue 4 258,216 252,204 Other income 5 29,459 12,293 Revenue and other income 287,675 264,497

Personnel expenses 6 (184,317) (177,815) Property expenses (23,611) (21,907) Depreciation and amortisation expenses 12,13 (26,988) (24,764) Impairment of intangible assets - (1,091) Housekeeping expenses (16,101) (14,327) Catering expenses (10,843) (11,840) Communication expenses (1,629) (1,359) Motor vehicle expenses (1,177) (1,430) Other expenses (16,831) (15,987) Expenses (281,497) (270,520)

Surplus/(deficit) before net finance income

6,178 (6,023)

Finance income 8,141 6,580 Finance costs (126) (164) Net finance income 7

8,015 6,416

Surplus for the year 14,193 393

Other comprehensive income Items that are or may be reclassified subsequently to profit or loss: Cash flow hedge – effective portion of changes in fair value (7) (197)

Items that will not be reclassified subsequently to profit or loss: Equity investments at FVOCI – net change in fair value (106) 408

Total comprehensive income for the year

14,080 604 The notes on pages 18 to 36 are an integral part of these financial statements.

13

BAPTISTCARE NSW & ACT FINANCIAL REPORT

Statement of financial position In thousands of AUD Note

2018 2017

Assets Cash and cash equivalents 8 21,735 13,737 Receivables 9 27,885 33,212 Inventories 29 42 Investments 10 146,539 127,039 Assets held for sale 11 900 3,810 Total current assets 197,088 177,840

Receivables 9 1,996 1,996 Investments 10 137,277 113,371 Property, plant and equipment 12 425,680 422,186 Intangible assets 13

5,268 5,847 Total non-current assets 570,221 543,400 767,309 721,240 Total assets

Liabilities Payables 14 518,256 492,874 Loans and borrowings 15 84 603 Employee benefits 16 28,215 26,848 Provisions 17 4,858 2,193 Deferred income 18 13,221 9,698 Derivative financial liability 204 197 Total current liabilities 564,838 532,413

Loans and borrowings 15 2,496 1,723 Employee benefits 16 2,465 2,367 Deferred income 18 16,443 17,219 Total non-current liabilities 21,404 21,309 Total liabilities 586,242 553,722 181,067 167,518 Net assets Accumulated funds Reserves 19 1,026 1,670 Retained earnings 180,041 165,848 Total accumulated funds 181,067 167,518 The notes on pages 18 to 36 are an integral part of these financial statements.

14

FOR THE YEAR ENDED 30 JUNE 2018

Statement of changes in funds

In thousands of AUD Balance as at 1 July 2016

Capital works fund- Retirement Villages 592

Surplus for the year Other comprehensive income Items that are or may be reclassified subsequently to profit or loss: Cash flow hedge – effective portion of changes in fair value Items that will not be reclassified subsequently to profit or loss: Equity investments at FVOCI – net change in fair value Total comprehensive income for the year

Fair value reserve 928

Hedging reserve

Retained earnings

Total funds

- 165,455 166,975

-

-

-

393

393

-

-

(197)

-

(197)

- -

408 408

- (197)

- 393

408 604

Net movement in Capital works fund (61) Balance as at 30 June 2017 531

- 1,336

- - (61) (197) 165,848 167,518

Balance as at 1 July 2017 531

Surplus for the year -

1,336

(197) 165,848 167,518

-

-

14,193

14,193

-

-

(7)

-

(7)

- -

(106) (106)

- (7)

- 14,193

(106) 14,080

Net movement in Capital works fund (69) Transfer to Payables (462) Balance as at 30 June 2018

-

- - 1,230

- - (204)

Other comprehensive income Items that are or may be reclassified subsequently to profit or loss: Cash flow hedge – effective portion of changes in fair value Items that will not be reclassified subsequently to profit or loss: Equity investments at FVOCI – net change in fair value Total comprehensive income for the year

The notes on pages 18 to 36 are an integral part of these financial statements.

15

- (69) - (462) 180,041 181,067

BAPTISTCARE NSW & ACT FINANCIAL REPORT

Statement of cash flows In thousands of AUD Note

2018

2017

Cash flows from operating activities Cash receipts from residents, clients, government subsidies and other income 264,356 257,795 Cash paid to suppliers, residents and employees (248,447) (252,309) Cash generated from operations 15,909 5,486 Dividends received

459 455 Interest received

5,354 6,125 Net cash from operating activities 21,722 12,066 Cash flows from investing activities Payments for property, plant and equipment (30,099) (59,446) Payments for intangible assets (1,701) (2,144) Proceeds from disposal of property, plant and equipment

1,180 1,429 Proceeds from sale of assets held for sale 24,154 3,275 Proceeds from sale of option over assets held for sale

- 1,473 Proceeds from disposal of equity instruments at FVOCI

- 2,048 Investment in interest bearing deposits (25,322) (62,145) Investment in equity securities (18,190) Net cash used in investing activities (49,978) (115,510) Cash flows from financing activities Net cash inflow from residential aged care accommodation bonds 30,659 43,677 Net cash inflow from retirement village ingoing contributions

6,314 56,177 Net cash inflow from drawdown of loan facility - 2,726 Net cash outflow from facility fees - (2,890) Payment of finance lease liabilities

(719) (961) Net cash from financing activities 36,254 98,729 Net increase/(decrease) in cash and cash equivalents

7,998 Cash and cash equivalents at beginning of year 13,737 Cash and cash equivalents at end of year 8 21,735 The notes on pages 18 to 36 are an integral part of these financial statements.

16

(4,715) 18,452 13,737

FOR THE YEAR ENDED 30 JUNE 2018

Index to notes to the financial statements Page

Note 1

Reporting Entity

18

Note 2

Basis of preparation

18

Note 3

Summary of significant accounting policies

19

Note 4

Revenue

27

Note 5

Other income

27

Note 6

Personnel expenses

28

Note 7

Finance income and finance costs

28

Note 8

Cash and cash equivalents

28

Note 9

Receivables

28

Note 10

Investments

29

Note 11

Assets held for sale

29

Note 12

Property, plant and equipment

30

Note 13

Intangible assets

31

Note 14

Payables

31

Note 15

Loans and borrowings

32

Note 16

Employee benefits

32

Note 17

Provisions

33

Note 18

Deferred income

33

Note 19

Reserves

34

Note 20

Operating leases

34

Note 21

Capital and other commitments

34

Note 22

Financial instruments – Fair values and risk management 35

Note 23

Contingencies

36

Note 24

Related parties

36

Note 25

Subsequent events

36

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

Notes to the financial statements 1. Reporting entity BaptistCare NSW & ACT (the “Company”) is a public company limited by guarantee and is recognised as a Public Benevolent Institution domiciled in Australia. The address of the Company’s registered office is 22 Brookhollow Avenue, Baulkham Hills, NSW 2153. The financial statements are as at and for the year ended 30 June 2018.

The Company is a not-for-profit entity and is primarily involved in the provision of aged and community care.

2. Basis of preparation (a)

Statement of compliance In the opinion of the Directors, the Company is not publicly accountable. The financial statements are Tier 2 general purpose financial statements which have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements adopted by the Australian Accounting Standards Board and the Australian Charities and Not-for-profit Commission Act 2012. These financial statements comply with Australian Accounting Standards – Reduced Disclosure Requirements.

The financial statements were approved by the Board of Directors on 24 September 2018.

(b)

Basis of measurement The financial statements have been prepared on the historical cost basis, except for financial instruments classified as equity securities and derivatives, which are measured at fair value.

(c)

Functional and presentation currency These financial statements are presented in Australian dollars, which is the Company’s functional currency.

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, all financial information presented in Australian dollars has been rounded to the nearest thousand, unless otherwise stated.

(d)

Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

18

FOR THE YEAR ENDED 30 JUNE 2018

3. Summary of significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. (a)

Financial instruments

(i)

Recognition and initial measurement Receivables issued are initially recognised when they originate. All other financial assets and financial liabilities are initially recognised when the Company becomes a part to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value plus transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

(ii)

Classification and subsequent measurement

Financial assets On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL).

Financial assets are not reclassified subsequent to their initial recognition, except if in the period the Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: • The asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and • The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.

Financial assets: Business model assessment The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes the stated policies and objectives for the portfolio and the operation of those policies in practice. This includes whether management’s strategy focuses on earning contractual interest income, frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. Financial assets that held for strategic purposes are measured at FVOCI.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest For the purpose of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

19

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3. Summary of significant accounting policies (continued) In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

(iii)

Subsequent measurement and gains and losses Financial assets at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Equity investments at FVOCI

These assets are subsequently measured at fair value.

Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

Non-derivative financial liabilities – Measurement Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.

(iv)

Derivative financial instruments and hedge accounting The Company holds derivative financial instruments to hedge its interest rate risk exposures.

Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.

Derivatives are initially measured at fair value; any directly attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in OCI.

Cash flow hedges When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognised in OCI and accumulated in the hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

The amount accumulated in equity is retained in OCI and reclassified to profit or loss in the same period or periods during which the hedged forecast cash flows affect profit or loss or the hedge item affects profit or loss.

If the forecast transaction is no longer expected to occur, the hedge no longer meets the criteria for hedge accounting, the hedging instrument expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the amount accumulated in equity is reclassified to profit or loss.

20

FOR THE YEAR ENDED 30 JUNE 2018

(b)

Property, plant and equipment

(i)

Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within the statement of profit or loss and other comprehensive income.

(ii)

Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised as property expenses in the statement of profit or loss and other comprehensive income as incurred.

(iii) Depreciation Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognised in the statement of profit or loss and other comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows: • Buildings 25-40 years • Leasehold improvements

3-40 years

• Plant, furniture and equipment

3-10 years

• Computer equipment

3-5 years

• Motor Vehicles

5-10 years

• Leased land

Lease term

Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.

21

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3. Summary of significant accounting policies (continued) (c)

Intangible assets

(i)

Computer software Computer software is recognised as an intangible asset unless the software is integral to the operation of the related property, plant and equipment. Computer software treated as an intangible asset is initially recognised at cost and subsequently measured at cost less accumulated amortisation and any accumulated impairment loss (see note 3(f)(ii)).

(ii)

Subsequent expenditure Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in property expenses in the statement of profit or loss and other comprehensive income as incurred.

(iii) Amortisation Amortisation is calculated over the cost of the asset, or another amount substituted for cost, less its residual value. Amortisation is recognised in the statement of profit or loss and other comprehensive income on a straight-line basis over the estimated useful lives of intangible assets from the date they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives for the current and comparative periods are as follows: • Computer software

3-5 years

• Service concession arrangement

20 years

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. (d)

Leased assets Leases in which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.

Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are classified as operating leases and the leased assets are not recognised in the Company’s statement of financial position.

Long-term land leases are recognised at the notional fair value of the leased land in the statement of financial position. This is offset by deferred contribution income from the lessor of the same amount, which is also recognised in liabilities. Both the asset and the liability are amortised over the term of the lease.

(e) Inventories Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in first-out principle, and includes expenditure incurred in acquiring the inventories, and other costs incurred in bringing them to their existing location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

22

FOR THE YEAR ENDED 30 JUNE 2018

(f) Impairment (i)

Financial assets The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost and contract assets (e.g. bid costs).

The Company measures loss allowances at an amount equal to lifetime expected credit losses.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

The Company recognises loss allowances for expected credit losses on financial assets measured at amortised cost and contract assets (e.g. bid costs).

The Company measures loss allowances at an amount equal to lifetime expected credit losses.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company’s historical experience and informed credit assessment and including forward-looking information.

Credit impaired financial assets At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is ‘credit impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Presentation of allowance for expected credit losses in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying value of the assets.

Write off The gross carrying amount of a financial asset is written off to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off.

(ii)

Non-financial assets The carrying amounts of the Company’s non-financial assets, other than inventories, are reviewed at each reporting date to determine whether there is any indication of impairment.

If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

The recoverable amount of an asset or cash-generating unit is the greater of its fair value less costs to sell and value in use. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cashgenerating unit”).

The Company’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the cash-generating unit to which the corporate asset belongs.

23

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3. Summary of significant accounting policies (continued) An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in impairment loss in the statement of profit or loss and other comprehensive income.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (g)

Assets held for sale Non-current assets that are expected to be recovered primarily through sale rather than through continuing use, are classified as held for sale. Immediately before classification as held for sale, the assets are remeasured in accordance with the Company’s accounting policies.

Thereafter generally the assets are measured at the lower of their carrying amount and fair value less cost to sell.

Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement are recognised in the statement of profit or loss and other comprehensive income. Gains are not recognised in excess of any cumulative impairment loss.

Property, plant and equipment once classified as held for sale are not depreciated.

(h)

Employee benefits

(i)

Defined contributions plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as personnel expenses in the statement of profit or loss and other comprehensive income in the periods during which services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(ii)

Other long-term employee benefits The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods plus related on-costs; that benefit is discounted to determine its present value and the fair value of any related assets is deducted.

The provision for employee benefits for long service is calculated using expected future increases in wage and salary rates including related on-costs and expected settlement dates based on turnover history and is discounted using the rates attaching to national corporate bonds at reporting date which most closely match the terms of maturity of the related liabilities.

The unwinding of the discount is treated as long service leave expense.

(iii)

Short-term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

24

FOR THE YEAR ENDED 30 JUNE 2018

(i) Provisions A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and the risks specific to the liability. (i)

Make good A make good provision is recognised when the Company enters into a lease contract that requires the property to be returned to the lessor in its original condition. The provision is based on the expected future cost of the refurbishment discounted to reflect current market assessments.

(ii)

Restructuring – redundancies A provision for restructuring is recognised when the Company has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating losses are not provided.

(iii)

Onerous operating lease contracts A provision for onerous operating lease contracts is recognised when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognises any impairment loss on the assets associated with that contract.

(j) Revenue (i)

Recurrent government subsidies and contributions Recurrent government subsidies and contributions are recognised as income when the Company has an unconditional right to receive and the Company complies with the conditions associated.

(ii)

Gross income from residents and clients Gross income from residents and clients is recognised as income when services provided to residents and clients are rendered.

(iii)

Daily accommodation payments (DAP) The daily price of a room is calculated based on the lump sum RAD and the current interest rate (MPIR) at the time of admission. The DAP is subject to fluctuation depending on interest rate movements.

(iv)

Refundable accommodation deposit Persons entering an aged care facility may choose to pay a refundable accommodation deposit in lieu of having to pay a daily accommodation payment. Refundable accommodation deposits are held by the Company in the form of interest free loans from residents and are repayable in full on separation from the facility.

(v)

Ingoing contribution income Persons entering independent living units within NSW are required to pay a loan licence fee in the form of an interest free loan, repayable in the event of vacation of the unit. The original loan made by a resident is reduced to an agreed residual value over a specified period as set out in the Resident Agreement, and in accordance with the Retirement Villages Act 1999 (NSW). For each resident, the loan reduction (retention) is recognised as revenue on a straight-line basis over the expected period of occupancy. The Company has no loan licence fees outside NSW. 25

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

3. Summary of significant accounting policies (continued) (vi)

Donations and legacies General donations and legacies are recognised in the statement of profit or loss and other comprehensive income as revenue when received or when the Company has an unconditional right to receive.

(vii) Deferred income - Consumer Directed Care (CDC) CDC services that have not been utilised during the period are reported as deferred income. (k)

Retirement villages income and expenditure The Company maintains separate resident statements of income and expenditure in accordance with the Retirement Villages Act 1999 (NSW) (the Act). The resident income and expenditure is controlled by the residents’ committees. The Company records the net surplus on the income and expenditure statement as a liability to the individual village. The Company is required to make good any deficit of a retirement village in accordance with the Act.

(l)

Lease payments Payments made under operating leases are recognised in the statement of profit or loss and other comprehensive income on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. The notional fair value of long-term land lease rentals is recognised as an expense in the statement of profit or loss and other comprehensive income. This is offset by contribution income from the lessor of the same amount, which is also recognised in the statement of profit or loss and other comprehensive income.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

(m) Finance income and finance costs Finance income comprises interest income on funds invested, and dividend income. Interest income is recognised as it accrues in finance income in the statement of profit or loss and other comprehensive income, using the effective interest method. Dividend income is recognised in finance income in the statement of profit or loss and other comprehensive income on the date that the Company’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.

Finance costs comprise the unwinding of the discount on finance leases and interest expense on the loan which is recognised using the effective interest method. (n)

Income tax The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997.

(o)

New standards and interpretations not yet adopted A number of new standards, amendments to standards are effective for annual periods beginning after 1 January 2017, and have not been applied in preparing these financial statements. None of these are expected to have a significant effect on the financial statements

26

FOR THE YEAR ENDED 30 JUNE 2018

of the Company. The Company does not plan to adopt this standard early and the extent of the impact has not been determined. (i)

AASB 15 Revenue from Contracts with Customers AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including AASB 118 Revenue, AASB 111 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.

AASB15 is effective for annual reporting periods beginning on or after 1 January 2019.

The Company is assessing the potential impact on its financial statements resulting from the application of AASB 15.

(ii)

AASB 16 Leases AASB 16 provides a new model for accounting for leases. The amendment removes the distinction between operating and finance leases. Lessees will be required to bring all leases on to the statement of financial position. Lessor accounting remains largely unchanged.

AASB 16 is effective for annual reporting periods beginning on or after 1 January 2019.

The Company is assessing the impact on its financial statements resulting from the application of AASB 16.

(iii)

AASB 1058 Income of Not-for-Profit Entities AASB 1058 clarifies and simplifies the income recognition requirements that apply to not-forprofit entities, in conjunction with AASB 15. The requirements of AASB 1058 more closely reflect the economic reality of not-for-profit entity transactions that are not contracts with customers. The timing of income recognition depends on whether such a transaction gives rise to a liability or other performance obligation.

AASB 1058 is effective for annual reporting periods beginning on or after 1 January 2019.

The Company is assessing the impact on its financial statements resulting from the application of AASB 1058.

4. Revenue

In thousands of AUD

2018 2017

Recurrent government subsidies and contributions 196,900 194,653 Gross income from residents and clients 48,810 49,555 Accommodation and ingoing contribution income 12,506 7,996

258,216 252,204

5. Other income

In thousands of AUD

2018 2017

Net gain on sale of property, plant and equipment and assets held for sale 20,527 2,114 Donations and legacies - churches and personal 2,889 1,789 Rental income 1,816 1,878 Revenue from sale of goods 419 3,641 Fundraising 365 298 Other income 3,443 2,573

29,459 12,293

27

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

6. Personnel expenses

In thousands of AUD

2018 2017

Wages and salaries 149,608 146,750 Other associated personnel expenses 16,972 13,991 Workers compensation 3,307 2,879 Contributions to defined contribution plans 14,430 14,195

184,317 177,815

7. Finance income and finance costs In thousands of AUD

Interest on investments Dividend income on equity securities Other Finance income

Unwinding of discount on finance lease Finance costs Net finance income

2018

2017

7,618 523 - 8,141

6,093 455 32 6,580

(126)

(126) 8,015

(164) (164) 6,416

8. Cash and cash equivalents In thousands of AUD

2018

Cash at bank and on hand

201 Bank deposits at call 21,534 Cash and cash equivalents 21,735

2017 482 13,255 13,737

9. Receivables In thousands of AUD

2018

Current

Receivables - Clients

1,855 Receivables - Residents

2,076 Deposits Receivable 12,947 Other receivables and prepayments 11,719 Provision for bad and doubtful debts (712)

27,885 Non-current

Other receivables and prepayments

1,996

1,996

28

2017 2,206 8,140 12,887 10,290 (311) 33,212 1,996 1,996

FOR THE YEAR ENDED 30 JUNE 2016

The movement in the allowance for impairment in respect of receivables during the year was as follows: In thousands of AUD 2018

Balance at beginning of the year 311 Impairment loss recognised 630 Amounts written off (229) Balance at end of the year

712

2017 302 230 (221) 311

10. Investments In thousands of AUD

Current

Interest bearing deposits

Non-current

Interest bearing deposits Equity securities

2018

2017

146,539 146,539

127,039 127,039

112,322 24,955 137,277

106,500 6,871 113,371

The carrying value of equity securities is equal to its fair value at 30 June 2018 and 30 June 2017.

11. Assets held for sale In thousands of AUD

2018

Land - Lot 101, Free Settlers Drive, Kellyville 900 Granville catering operation

- Land - 28 Memorial Avenue, Kellyville

-

900

2017 980 2,830 3,810

During the year, the land at Memorial Avenue, Kellyville and the Granville operations were disposed of, resulting in a gain of $20,344,000 (refer note 5).

29

30

Carrying amounts At 1 July 2017 At 30 June 2018

Cost or deemed cost Balance at 1 July 2017 Additions Transfer (from) / to capital works in progress Disposals Reclassification Transfer to assets held for sale Balance at 30 June 2018 Depreciation Balance at 1 July 2017 Depreciation for the year Disposals Reclassification Balance at 30 June 2018

In thousands of AUD

291,151 291,657

94,924 15,925 (38) 1,830 112,641

84 87 152 323

59,448 58,373

404,298

(44) 2,372 -

(2) (35) (900)

58,696

386,075 621 15,274

32,083 32,249

37,962 5,590 (2,767) (1,472) 39,313

71,562

(2,798) (1,613) -

70,045 2,733 3,195

Plant, furniture & Buildings equipment

59,532 101 -

Freehold land & Improvements

12. Property, plant and equipment

1,213 1,070

7,997 689 (36) (55) 8,595

9,665

(36) (10) -

9,210 501 -

Computer equipment

5,895 3,208

5,072 1,707 (1,384) (475) 4,920

8,128

(2,342) (687) -

10,967 190 -

Motor vehicles

11,586 11,128

11,715 710 (3) 20 12,442

23,570

(3) (27) -

23,301 91 208

Leased assets

20,810 27,995

-

27,995

-

20,810 25,862 (18,677)

Capital works in progress

422,186 425,680

157,754 24,708 (4,228) 178,234

603,914

(5,225) (900)

579,940 30,099 -

Total

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2018

13. Intangible assets

Service

Computer concession In thousands of AUD software arrangement Total

Cost

Balance at 1 July 2017 17,248 2,547 19,795 Additions 1,701 - 1,701 Disposals (4,394) - (4,394) Balance at 30 June 2018 14,555 2,547 17,102 Amortisation Balance at 1 July 2017 Amortisation for the year Disposals Balance at 30 June 2018

Carrying amounts At 1 July 2017 At 30 June 2018

13,056 2,153 (4,394) 10,815

4,192 3,740

892 13,948 127 2,280 - (4,394) 1,019 11,834

1,655 1,528

5,847 5,268

14. Payables In thousands of AUD

Current

Trade payables and accrued expenses

Capital works fund - Retirement Villages Refundable residential aged care accommodation bonds

Refundable retirement village ingoing contributions

2018

2017

29,741 462 325,576 162,477 518,256

29,288 302,079 161,507 492,874

Capital works fund – Retirement Village In accordance with the Retirement Villages Act 1999 (NSW) (the Act) the operator of a retirement village may maintain a capital works fund. Section 99 (5) of the Act stipulates that the operator of the retirement village must not use the capital works fund except to meet the cost of capital maintenance, or as agreed by the residents of the retirement village, or as prescribed by the Regulations. The 2017 Capital works fund was recorded as an equity reserve.

Refundable residential aged care accommodation bonds and retirement village ingoing contributions Residential aged care deposits (RADs) and accommodation bonds and retirement village ingoing contributions are classified as current liabilities as they may be contractually refundable within twelve months. It is anticipated that only a portion of the balance will be required to be repaid in that period and based on previous experience, the repayments are offset by inflows of accommodation bonds and ingoing contributions from residents.

31

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

15. Loans and borrowings In thousands of AUD

2018

Current

Charitable loan funds

10 Finance lease liability

74

84 Non-current

Finance lease liability

1,649 Borrowings 847

2,496

2017 10 593 603 1,723 1,723

A $155,000,000 loan facility was established on 1 February 2017 to provide liquidity for the financing of the NSW State Government’s Social and Affordable Housing Fund (SAHF) project.

This includes a construction facility and term facility which will be drawn down in set tranches as each stage of SAHF progresses. The maturity date of the facility is 1 February 2023. The facility was drawn down by $2,726,000 as at 30 June 2018. Consistent with the accounting standards, the loan liability and loan transaction costs have been offset and are in a liability position of $847,000 at 30 June 2018.

2018

2017

74 532 1,117 1,723

593 475 1,248 2,316

In thousands of AUD 2018

Current

Salary, wages and superannuation payable

5,859 Liability for annual leave 13,062 Liability for long-service leave

9,294

28,215 Non-current

Liability for long-service leave

2,465

2,465

2017

In thousands of AUD

Finance lease liabilities

Future minimum lease payments:

Less than one year

Between one and five years

More than five years

16. Employee benefits

32

5,706 12,868 8,274 26,848 2,367 2,367

FOR THE YEAR ENDED 30 JUNE 2018

17. Provisions

Onerous operating

lease In thousands of AUD contract

Balance at 1 July 2017

766 Provisions made during the year

425 Provisions used during the year

(320) Provisions reversed during the year - Balance at 30 June 2018

871

Make good

Other

Total

1,335 1,691 - (34) 2,992

92 995 (92) - 995

2,193 3,111 (412) (34) 4,858

Onerous operating lease contract provision A provision has been made to relocate and house Kitty Doyle residents, with whom leases are held, during construction of new dwellings on site as part of the Social and Affordable Housing Fund (SAHF) program with the NSW Government.

Make good provision The Company has operating leases that require the asset to be returned to the lessor in its original condition. A provision has been recognised at present value for the expected cost of refurbishment.

18. Deferred income In thousands of AUD

2018

Current

Government grants

213 Government contributions

66 Client funds - Consumer Directed Care 11,303 Independent Living Unit Deferred Management Fees (ILU DMF) 1,639

13,221 Non-current

Government grants

6,824 Government contributions 5,203 Independent Living Unit Deferred Management Fees (ILU DMF)

4,416

16,443

2017 213 66 8,769 650 9,698 7,037 5,270 4,912 17,219

In 2011, the Company received $8,530,000 for the construction of community housing at Goulburn and Lismore. The grant has been recognised as deferred income and is being amortised over forty years. The Company has agreed to provide the community housing for a period of 40 years and this obligation is secured by way of registered mortgages over the relevant properties. At the end of 40 years, the mortgages will be discharged and the properties will belong unencumbered to the Company.

33

BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

19. Reserves Fair value reserve The fair value reserve includes the cumulative net change in the fair value of equity securities until the investment is derecognised or impaired.

Hedging reserve Under the terms of the Social and Affordable Housing Fund (SAHF) financing facility, the Company is required to maintain an interest rate hedging strategy to address the risk of adverse interest rate movements. The hedging reserve includes the difference between the change in the fair value of the loan to that of the hedging instrument.

20. Operating leases Leases as lessee Non-cancellable operating lease rentals are payable as follows: In thousands of AUD 2018

Less than one year 1,780 Between one and five years 3,639 More than five years 870

6,289

2017 1,483 3,289 1,362 6,134

The Company leases a number of properties under operating leases. The duration of the leases are between one and ten years and some leases include options to renew. Lease agreements may include fixed increases or may include contingent rentals based on market review or the Consumer Price Index.

During the financial year ended 30 June 2018, $2,657,000 (2017: $3,071,000) was recognised as an expense in the statement of profit or loss and other comprehensive income in respect of operating leases. This includes a provision of $425,000 for the accommodation of the Kitty Doyle residents during the construction of new facilities.

The Company has two long-term operating leases of land in Queanbeyan and Goulburn with the State of New South Wales. The lease terms are both for 40 years, with no option to renew and the Company pays a nominal rent to the lessor. The notional fair value of the approximate lease rentals amounting to $178,000 (2017: $178,000) has been recognised as an expense in the statement of profit or loss and other comprehensive income. However, this is offset by contribution income from the lessor of the same amount, which is also recognised in the statement of profit or loss and other comprehensive income. Accordingly, there is no net impact on the net result for the current and previous years.

21. Capital and other commitments In thousands of AUD 2018 Capital expenditure commitments

167,564

2017 185,214

Included in capital expenditure commitments are costs for the design and construction for major projects associated with the Social and Affordable Housing Fund (SAHF) program.

34

FOR THE YEAR ENDED 30 JUNE 2018

22. Financial instruments – Fair values and risk management Accounting classifications The following table shows the carrying amounts per category of financial assets and financial liabilities.

2018 2017 Fair value Fair value – hedging – hedging In thousands of AUD instruments instruments Interest rate swaps used for hedging

(204)

(197)

Derivative assets and liabilities designated as cash flow hedges

The following table indicates the periods in which the cash flows associated with cash flow hedges are expected to occur and the fair values of the related hedging instruments.

In thousands of AUD Interest rate swaps used for hedging

2018 Expected cash flows

2017 Expected cash flows

Carrying amount

12 months or less

More than one year

Carrying amount

12 months or less

More than one year

(204)

-

(204)

(197)

-

(197)

The following table indicates the periods in which the cash flows associated with cash flow hedges are expected to impact profit or loss and the fair values of the related hedging instruments.

2018 Expected impact

In thousands of AUD Interest rate swaps used for hedging

2017 Expected impact

Carrying amount

12 months or less

More than one year

Carrying amount

12 months or less

More than one year

(204)

-

(204)

(197)

-

(197)

Interest rate risk Consistent with the requirements of the loan facility agreement, the Company hedges its interest rate risk exposure over the debt agreement.

The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the reference interest rates, tenors, repricing dates and maturities and the notional or par amounts.

The Company assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method.

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

23. Contingencies Where Government capital grants have been made towards buildings, they may be refundable to the Government in the event of sale of the property on which these buildings have been constructed or in the event of a change in the usage of the property for purposes not in accordance with the grants. Directors have no future plans which would trigger the refund of capital grants.

24. Related parties Key management personnel compensation The key management personnel compensation included in ‘personnel expenses’ (see note 6) was $2,477,581 for the year ended 30 June 2018 (2017: $2,453,766).

As part of their remuneration package, the Company also provides non-cash benefits to key management personnel and contributes to a superannuation fund on their behalf.

Transactions with other related parties B.C.S. Foundation Pty. Limited acts as a trustee and custodian trustee for six charitable trusts, including the BCS Foundation. These trusts collectively distributed $933,275 (2017: $816,856) during the year ended 30 June 2018 to the Company.

During the year, Church & Grace acted for the Company in relation to several legal matters and received fees for the services provided. A Director of the Company, John Church is a consultant to Church & Grace but has no equity or beneficial interest in the firm and was not involved, directly or indirectly, in the provision of legal services to the Company and received no benefit in relation to these services. All transactions with Church & Grace were conducted at arm’s length.

25. Subsequent events There have been no events subsequent to the balance date which would have a material effect on the Company’s financial statements at 30 June 2018.

36

FOR THE YEAR ENDED 30 JUNE 2018

Directors’ declaration In the opinion of the Directors of BaptistCare NSW & ACT (the Company): (a) the financial statements and notes that are set out on pages 13 to 36 are in accordance with the Australian Charities and Not-for-profits Commission Act 2012, including:

(i) giving a true and fair view of the Company‘s financial position as at 30 June 2018 and of its performance, for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards - Reduced Disclosure Regime and the Australian Charities and Not-for-profits Commission Regulation 2013; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of Directors.

Judith Carpenter Director – Chairperson Dated at Sydney, this 24th day of September 2018

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BAPTISTCARE NSW & ACT FINANCIAL REPORT

Independent Auditor’s Report ABCD To the members of BaptistCare NSW & ACT

Opinion We have audited the Financial Report, of BaptistCare NSW & ACT (the Company).

In our opinion,auditor’s the accompanying ReportofofBaptistCare the Company is in & accordance with Division 60 Independent report toFinancial the members NSW ACT of the Australian Charities and Not-for-profits Commission (ACNC) Act 2012, including: We have audited the accompanying financial report of BaptistCare NSW & ACT (the (i) givingwhich a truecomprises and fair view of the Company’s position as at2014, 30 June 2018, and of its Company), the statement of financial financial position as at 30 June and the financial performanceincome, and itsstatement cash flows the year ended that date; and flows statement of comprehensive of for changes in funds andon statement of cash for the year endedwith on that date, notes 1 to 28 comprising significantRequirements accounting and Division (ii) complying Australian Accounting Standardsa –summary ReducedofDisclosure policies and other explanatory information and the directors’ declaration.

60 of the Australian Charities and Not-for-profits Commission Regulation 2013.

This Financial audit report has also been prepared for the members of the Company pursuant to The Report comprises: Australian Charities and Not-for-profits Commission Act 2012 and the Australian Charities and (i) Statement of financial position as at 30 June 2018; Not-for-profits Commission Regulation 2013 (ACNC), (collectively the Act and Regulations). (ii) Statement of profit or loss and other comprehensive income, Statement of changes in funds, Directors’ responsibility for the financial report and Statement of cash flows for the year then ended; The Directors of the Company are responsible for the preparation of the financial report that (iii) Notes including a summary of significant accounting policies; and gives a true and fair view in accordance with Australian Accounting Standards – Reduced (iv) Directors’ declaration of the Company.

Disclosure Requirements, the ACNC and the Act and Regulations. The Directors’ responsibility also includes such internal control as the Directors determine necessary to enable the Basis forofopinion preparation the financial report that gives a true and fair view and is free from material misstatement whether due to fraud or error.

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit Auditor’s we responsibility evidence have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibility is to express an opinion on the report basedinon our audit. We Our responsibilities under those standards arefinancial further described the Auditor’s responsibilities for the conducted our audit in accordance with Australian Auditing Standards.

These Auditing audit of the Financial Report section of our report.

Standards require that we comply with relevant ethical requirements relating to audit We are independent of the Company in accordance with theassurance auditor independence engagements and plan and perform the audit to obtain reasonable whether the requirements of the ACNC 2012 and the ethical requirements of the Accounting Professional and Ethical financial reportAct is free from material misstatement.

Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant Anour audit involves performing to obtain audit aboutour theother amounts and responsibilities in to audit of the Financial procedures Report in Australia.

We evidence have fulfilled ethical disclosures inwith the financial report. The procedures selected depend on the auditor’s judgement, accordance the Code. including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control Other information relevant to the Company’s preparation of the financial report that gives a true and fair view in order toInformation design auditisprocedures that non-financial are appropriateinformation in the circumstances, but not for the reporting which Other financial and in BaptistCare’s annual purpose of expressing on the effectiveness Company’s internal control.

An are responsible is provided in additionantoopinion the Financial Report and of thetheAuditor’s Report.

The Directors audit also includes evaluating the appropriateness of accounting policies used and the for the Other Information. reasonableness of accounting estimates made by the directors, as well as evaluating the overall Our opinionof onthe the Financial Report does not cover the Other Information and, accordingly, we do presentation financial report. not express an audit opinion or any form of assurance conclusion thereon.

We performed the procedures to assess whether in all material respects the financial report gives a true and fair view, in accordance with Australian Accounting Standards – Reduced Disclosure Requirements, and the ACNC, a true and fair view which is consistent with our understanding of the Company’s financial position and of its performance.

38

FOR THE YEAR ENDED 30 JUNE 2018

ABCD In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information, andthe based the work we have performed on the Information that We believe that auditon evidence we have obtained is sufficient andOther appropriate to provide a we obtained prior this Auditor’s Report we have nothing to report. basis to forthe our date auditof opinion.

Independence Responsibilities of the Directors for the Financial Report

In conducting our audit, we have complied with the independence requirements of the The Directors are responsible for: Australian Charities and Not-for-profits Commission Act 2012. (i) Preparing the Financial Report that gives a true and fair view in accordance with Australian Auditor’s opinion Accounting Standards - Reduced Disclosures Requirements and the ACNC. In our opinion, the financial report of BaptistCare NSW & ACT is in accordance with the (ii) Implementing necessary internal control to enable the preparation of a Financial Report that Australian Charities and Not-for-profits Commission Act 2012 including: gives a true and fair view and is free from material misstatement, whether due to fraud or error. (a) giving a true and fair view of the Company’s financial position as at 30 June 2014 and of (iii) Assessing the Company’s ability to continue as a going concern. This includes disclosing, as its performance for the year ended on that date; and applicable, matters related to going concern and using the going concern basis of accounting (b) complying with Australian – Reduced Requirements and no realistic unless they either intendAccounting to liquidateStandards the Company or toDisclosure cease operations, or have the Australianbut Charities and Not-for-profits Commission Regulation 2013. alternative to do so.

Auditor’s responsibilities for the audit of the Financial Report Our objective is: (i) to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and KPMG (ii) to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Chris Hollis Misstatements can arise from fraud or error. They are considered material if, individually or in the Partner aggregate, they could reasonably be expected to influence the economic decisions of users taken on Sydney the basis of this Financial Report.

Undertaking audit in accordance with Australian Auditing Standards, means exercising professional 29 Septemberan 2014 judgment and maintaining professional skepticism.

Our responsibilities include: (i) Identifying and assessing the risks of material misstatement of the Financial Report, whether due to fraud or error. (ii) Designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting 39

BAPTISTCARE NSW & ACT FINANCIAL REPORT

ABCD from error. This is because fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. (iii) Obtaining an understanding of internal control relevant to the Audit in order to design audit procedures that are appropriate in the circumstances. This is not for the purpose of expressing an opinion on its effectiveness. (iv) Evaluating the appropriateness of accounting and the reasonableness We believe that the audit evidence we have obtained is policies sufficientused and appropriate to provide a of accounting basis for our audit estimates opinion. and related disclosures made by the Directors. (v) Concluding on the appropriateness of the Directors use of the going concern basis of Independence accounting and, based on the audit evidence obtained, whether a material uncertainty exists In conducting our audit, we have complied with the independence requirements of the related to events or conditions that may cast significant doubt on the Company’s ability to Australian Charities and Not-for-profits Commission Act 2012. continue as a going concern. If we conclude that a material uncertainty exists, we are required Auditor’s opinion to draw attention in our Auditor’s Report to the related disclosures in the Financial Report or, if disclosures are inadequate, to modify our & opinion. conclusions In oursuch opinion, the financial report of BaptistCare NSW ACT isOur in accordance withare thebased on the audit evidence obtained up to the date of our Auditor’s Report.

However, future events or conditions Australian Charities and Not-for-profits Commission Act 2012 including: may cause the Company to cease to continue as a going concern. (a) giving a true and fair view of the Company’s financial position as at 30 June 2014 and of (vi) Evaluating thefor overall presentation, structure its performance the year ended on that date; andand content of the Financial Report, including the disclosures, and whether the Financial Report represents the underlying transactions and (b) complying Australian – Reduced Disclosure Requirements and events in with a manner that Accounting achieves fairStandards presentation. the Australian Charities and Not-for-profits Commission Regulation 2013.

KPMG KPMG

Stephen Isaac Chris Hollis Partner Partner Sydney Sydney 24 2018 29 September September 2014

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1300 275 227 ask@baptistcare.org.au baptistcare.org.au BaptistCare Level Two, 22 Brookhollow Avenue PO Box 7626 Baulkham Hills NSW 2153 BaptistCare NSW & ACT ABN 90 000 049 525

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